O.C. Supervisors to Vote on County Raises

Unions being polled on board's deficit-cutting offer this week. Retirees say their benefits would be cut back to fund workers' salary hikes.

After pulling back the deal they were poised to approve weeks ago, Orange County supervisors are set to vote next week on raises for thousands of county employees -- in exchange for concessions from workers and retirees to shore up deficits in the county's retiree medical care and pension funds.

Officials have been struggling for more than a year to reduce the funds' $3.7-billion shortfall, which has been attributed to increased medical costs, retirement deals cut over the years and the fact that retirees are living longer.

The proposal would go a long way toward cutting the $1.4-billion deficit in the retiree medical fund. Through a combination of cuts within the fund, the county expects to save $815 million, or more than half the fund's deficit.

Those who will bear the brunt are retirees, who would face increased costs and reductions in payments they receive for medical coverage.

Retirees, who can no longer be union members, say no one has the right to negotiate away benefits that were part of labor deals when they worked for the county in exchange for raises awarded to current employees.

"It's a damn major disaster to retirees," said Fred Branca, president of the Retired Employees Assn. of Orange County. "This is disgraceful. It's a slap in the face. It's going to adversely impact people financially and medically."

Union leaders support the plan. Two unions representing nearly 14,000 county employees are holding ratification votes throughout this week.

"I hope the employees vote to approve it, because I think it will be extremely beneficial to the long-term financial health of the county," said Bill Campbell, chairman of the Board of Supervisors.

The county offered workers raises of 4.75% in July. The Orange County Employees Assn., the larger union, ratified the offer, but supervisors stalled on final approval.

Last week, the county re-extended the offer, but added give-backs on pension and retiree medical funding.

Nearly a third of the county's projected savings would come from splitting active employees from retirees in the pool of workers for which the county buys medical insurance. That would reduce the county's cost of ensuring current workers, who are younger and healthier, and increase the cost of insuring retirees, who would bear most of that increase.

Other savings would come from a 50% reduction in the monthly medical grants retirees receive. The cut would be made once they become eligible for Medicare. Current retirees 65 and older would not be affected. Reductions would also include cutting cost-of-living adjustments retirees receive in medical grants.

The county would also reduce grants for employees who retire before age 60.

The proposed changes would reduce the county's annual retiree medical costs by as much as $90 million, to about $35 million. Raises are projected to cost the county an additional $34 million per year.

Under the terms of the deal, current county employees would pay an additional $10 million per year into the pension fund, which faces a deficit of $2.3 billion. Most of that would come from switching the employees' contribution from the retiree medical fund to the pension fund.

"It's kind of the shared-pain format," said county Treasurer and Supervisor-elect John Moorlach.

"I think the employees realize that if they make some concessions now, they get their raise, which is probably a little leverage. If we don't resolve this liability, then we're looking at layoffs, so I'm excited we're addressing a massive, critical financial issue."